KARACHI: Silkbank has informed through a press release that in order to improve the bank’s financial position, Silkbank has entered into a REIT arrangement for the disposal of mortgaged land with Arif Habib REIT Management Company (RMC). This was primarily because of the various provisions in 2020 that the bank underwent against some borrowers engaged primarily in the real estate business, which were secured against mortgage of land.
This development will substantially address the bank’s Nonperforming loans (NPL) issue and result in major provision reversals.
Silkbank also entered into an agreement for disposal for its owned properties with the RMC. This will not only reduce non-earning assets of the Bank but significant capital gains are also expected to be realized by it. The Bank has already received approx. Rs.2.6 billion as down payment against the said REIT structure.
The bank has also entered into arrangements with other major borrowers to ensure expeditious recovery of loans classified in 2020. It expects most of these provisions to reverse within the next 12 – 24 months through the settlement and sale of mortgaged properties.
Moreover, to improve the bank’s financial performance The bank has registered a 41 per cent growth in its credit cards and personal loan products, increasing profit before taxes from Rs1.57 billion in 2019 to Rs2.23 billion in 2020. The deposits of the bank substantially increased by Rs21 billion compared to December 2019, taking the total deposit base to Rs 160 billion. Local currency Current Account grew by 32 per cent while CASA deposits improved from 61 per cent in December 2019 to 63 per cent in December 2020. The bank’s net revenue also increased by Rs2.96 billion registering 61 per cent growth while expenses declined by Rs638 million, a decline of 8 per cent.
Earlier in a notice to the Pakistan Stock Exchange dated October 31, 2022, Silkbank informed that Park View Enclave limited is no longer pursuing its Public Announcement of Intention (PAI). Arif Habib Limited (AHL), manager to the offer informed that due to changes in business priorities, Park View Enclave will no longer pursue the PAI. Park View was interested in acquiring at least 51 per cent of the business with investment of upto Rs12 billion.
AHL also informed the board that they have identified various other strong potential investors that have prospects of meeting regulatory criteria. AHL also claims that the board will be updated with PAIs in the coming weeks. This equity injection through investment will help the bank with its post capitalization and complying with regulatory capital requirements and will work in hand with the current steps undertaken by the bank.
